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Farm deal signals co-operation among VN firms

Update: August, 16/2018 - 07:00
A production line at Thaco Mazda Factory of Trường Hải Auto Corporation. - VNA/VNS Photo Thống Nhất
Viet Nam News

HÀ NỘI – The latest co-operative agreement between farming and agricultural firm Hoàng Anh Gia Lai (HAGL) and Trường Hải Auto Corporation (Thaco) has suggested that Vietnamese firms are willing to work together to improve their competitiveness as pressure from foreign businesses mounts.

The deal, signed on August 8, allows Thaco to buy convertible bonds worth VNĐ3.8 trillion (US$163.1 million) issued by HAGL’s sub-unit HAGL Agrico, purchase VNĐ4 trillion worth of 51 per cent ownership of HAGL Myanmar Co Ltd, and help HAGL restructure its VNĐ14 trillion worth of debts.

According to HAGL chairman Đoàn Nguyên Đức, Thaco’s total investment in HAGL’s sub-units and Myanmar projects is estimated at more than VNĐ22 trillion.

The deal aims to assist HAGL resolve its problems with rubber farms in Việt Nam, Laos and Cambodia, which have made the group unable to re-pay loans due to the sharp decline of rubber price.

The cost has fallen to around $1,300 per tonne compared to $5,000 per tonne when its farms were first developed.

Total loans of HAGL are estimated at VNĐ23 trillion, leading to high annual interest rate for the company.

Despite efforts to switch its business focus to fruit and other products, the company has still encountered troubles, seeing its shares fall sharply from around VNĐ40,000 per share in February 2011 to VNĐ7,000 per share at the close of August 15.

Prime Minister Nguyên Xuân Phúc said at the signing ceremony of the HAGL-Thaco agreement that the deal is a good way to help large-cap companies boost their performances together, and make great contributions to the development of a high-tech agriculture sector.

“The deal also motivates Vietnamese companies to achieve a win-win situation, in which there will be not only big farms but also smart production, automated production chain and higher productivity,” the PM said.

Prior to HAGL-Thaco deal, the largest dairy producer Vietnam Dairy Products Joint Stock Company (Vinamilk) and the national flag carrier Vietnam Airlines on August 6 signed a five-year strategic deal that allows Vinamilk-made products to be consumed on Vietnam Airlines’ flights departing from Việt Nam.

The deal is expected to raise Vinamilk’s output consumption on flights by 10 per cent per year and help promote the best Vietnamese brands to the world.

According to Vietnam Airlines general director Dương Trí Thành, the deal will help improve the supply chain that connects Vietnamese brands to international markets.

Experts say those deals between domestic giant businesses must be spread wide among the business community to push them to co-operate given the rising pressure of foreign firms.

There should be new forms to connect local companies with each other to form allies such as co-operative, franchising and associating firms, they say.

According to Zulkifli Bin Baharudin, executive chairman of the logistics and supply chain company Indo-Trans Corporation, Vietnamese firms will remain weak if they try to go their own way to conquer other markets.

Therefore, Vietnamese firms should group together to be stronger and faster in order to participate in the global supply chain, he said. – VNS

 

 

 

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